Gross is a good bond trader, but this is gibberish.
Not since the Spanish found a mountain of silver in the mountains of Bolivia has the money supply doubled in six months.
Nothing will be normal again until the Fed finishes its job.
That's the story.
* * * * * J B K * * * * *
San Francisco
In this New Normal environment it is instructive to observe that the operative word is "new" and that the use of historical models and econometric forecasting based on the experience of the past several decades may not only be useless, but counterproductive. When leveraging and deregulating not only slow down, but move into reverse gear encompassing deleveraging and reregulating, then it pays to look at historical examples where those conditions have prevailed. Two excellent studies provide assistance in that regard – the first, a study of eight centuries of financial crisis by Carmen Reinhart and Kenneth Rogoff titled This Time is Different, and the second, a study by the McKinsey Global Institute speaking to "Debt and deleveraging: The global credit bubble and its economic consequences."
http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2010/February+2010+Gross+Ring+of+Fire.htm
